Working Paper: NBER ID: w14394
Authors: Nicholas Bloom; Christos Genakos; Ralf Martin; Raffaella Sadun
Abstract: We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs. Better managed firms are also significantly more productive. One interpretation of these results is that well managed firms are adopting modern lean manufacturing practices, which allows them to increase productivity by using energy more efficiently. This suggests that improving the management practices of manufacturing firms may help to reduce greenhouse gas emissions.
Keywords: Management Practices; Energy Intensity; Productivity; Greenhouse Gas Emissions
JEL Codes: L26; L6; M11; M12; Q40; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| better management practices (M54) | lower energy intensity (Q41) |
| better management practices (M54) | higher total factor productivity (O49) |
| higher total factor productivity (O49) | lower energy intensity (Q41) |
| better management practices (M54) | more efficient energy inputs (Q41) |
| tougher market competition (L13) | better management practices (M54) |